International R&D collaboration networks

Abstract

We reconsider the Goyal and Moraga-González (Rand Journal of Economics, Vol. 32 (2001), pp. 686-707) model of strategic networks in order to analyse how government policies (e.g. subsidies) will affect the stability and efficiency of networks of R&D collaboration among three firms located in different countries. A conflict between stability and efficiency is likely to occur. When governments cannot subsidize R&D, this conflict will occur if public spillovers are not very small. However, when governments can subsidize R&D, the likelihood of a conflict is considerably reduced. Indeed, a conflict will arise only if public spillovers are very small or quite large. © 2007 Blackwell Publishing Ltd. and The University of Manchester.